MANU/DE/0376/2003

Equivalent Citation: 2003IIIAD(Delhi)694, 104(2003)DLT601

IN THE HIGH COURT OF DELHI

Civil Writ Petition No. 3916 of 2001
Decided On: 18.03.2003
Appellants: Bharat Filling Station and Anr.
Vs.
Respondent: Indian Oil Corporation Ltd.
Hon'ble Judges/Coram:
A.K. Sikri, J.
Counsels:
For Appellant/Petitioner/plaintiff: Pramod Ahuja, Adv R.V. Sinha, Adv
Case Note:
Constitution - natural justice - Article 226 of Constitution of India -
adherence to principle of natural justice is of supreme importance when
quasi judicial body determine dispute between parties - in case immediate
action required then post decisional hearing may be given - decision
vocative of principles of natural justice invalid.

JUDGMENT
A.K. Sikri, J.
1. Petitioner No. 2 is an Ex-serviceman. He was Sqn. Leader who participated in 1971
Indo-Pak war and was boarded out because of permanent disability he suffered in the
said war. Respondent No. 2, namely, Indian Oil Corporation Ltd. (IOCL) has scheme
for allotment of petrol pumps i.e. retail outlets on preferential basis to Ex-servicemen
and particularly those suffering disabilities while in action. Petitioner No. 2 applied
for and was allotted retail outlet at Delhi Palam Road, New Delhi for sale of petrol
and petroleum products in the year 1977. He started petrol pump under the name and
style of Bharat Filling Station (petitioner No. 1). Initially he was the sole proprietor of
the concern which was subsequently converted into a partnership firm.
2. An agreement dated 8.2.1978 was executed between the petitioner No. 2 and the
respondent No. 2 for running the aforesaid outlet. The petitioners had been running
this petrol pump on the aforesaid outlet since then. However, vide letter dated
13.6.2001 the respondent No. 2 Corporation has terminated the dealership of the
petitioners in respect of the aforesaid retail outlet. Challenging this decision, present
petition has been filed by the petitioners.
3. It is stated in the petition that the petitioners have been running the petrol pump
strictly in accordance with the terms and conditions of the Agreement and have not
committed any irregularities in this behalf. It is averred that on 19.5.2001, an Officer
of the respondent No. 2 had carried out inspection under various heads and a

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 satisfactory report to this effect was submitted. On 3.6.2001 petrol pump of the
petitioners was again inspected by the officials of the respondent No. 2 and this time
also, no complaint of any short supply of the petrol pump was made as would be
clear from letter dated 4.6.2001 written by Chief Divisional Manager of Indian Oil
Corporation to the petitioner. The only irregularity found was that sales and other
rooms were found to be locked and without lights resulting in the entire building
being dark and other similar minor irregularities. Insofar as quality and quantity of
petroleum products are concerned, no deficiency was pointed out. It appears that on
10.6.2001 the Economic Offences Wing, Crime Branch, Delhi Police along with
officials of respondent No. 2 came for inspection at 8 p.m. at the petitioners petrol
pump on the basis of some complaint filed before them and inspection was carried
out. According to the respondents during this inspection it was found that 3 Z-line
dispensing units (2 HSD and 1 MS of 2-3 wheelers) were having extra fittings which
were not part of original equipments. On checking it was found that an extra switch
was installed in the sloping column inside nozzle boot resulting in delivering short
supply of 200 ML in every 5 litres. During this inspection, Crime Branch officials also
called L&T representatives to check the equipments and they also confirmed that the
extra switch installed by the petitioners in the aforesaid 3 Z-line machine was not a
part of the original equipment supplied by them. On the basis of this inspection, the
petitioner No. 2 was arrested on the same day i.e. 10.6.2001 and an FIR was lodged
by the Crime Authorities under Section 120 and Section 420, IPC against him.
4 . On the basis of aforesaid alleged irregularities as found in the investigation, the
respondent No. 2 terminated the dealership of the petitioners wide communication
dated 13.6.2001. In this notice of termination the respondent No. 2 has mentioned in
detail about the aforesaid inspection carried out on 10.6.2001 and the deficiencies
found therein. After stating the factum of inspection, deficiencies found and lodging
of FIR, the said termination order reads as under:
"The aforesaid irregularities/acts are not only in violation of terms and
conditions of the agreement of dealership, but are also in violation of MS/
HSD Control Order, 1998 and Weights and Measures Act. The above acts of
your were widely reported in the Press, which has brought bad name to the
Corporation.
In view of the serious breaches of the Dealership Agreement and provisions
of MS/HSD Control Order, 1998, I am of the opinion that your acts are
prejudicial to the interest and good name of the Corporation and its
products. Therefore, I have come to the conclusion that the Corporation
should not have any further association with you as our dealer. Accordingly,
it has been decided to terminate your Agreement of Dealership forthwith
under the terms of the Agreement of Dealership dated 2.6.1999. Please note
that the dealership granted to you vide Agreement of Dealership dated
2.6.1999 shall hereby stand terminated forthwith."
5 . Thus treating the aforesaid irregularities to the interest of the good name of the
Corporation, it was decided to terminate Agreement of Dealership forthwith under the
terms of the Agreement dated 2.6.1999.
6. Learned Counsel for the petitioners submitted that impugned notice of termination
is clearly illegal inasmuch as prior to this termination no show-cause notice was
served upon the petitioners nor were they given any opportunity of being heard
against this drastic action taken by the respondent No. 2. He further submitted that

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 the respondent No. 1 has issued Marketing Discipline Guidelines which, inter alia,
stipulate the procedure for dealing with such kinds of offences. His submission was
that not only norms contained therein were not violated in any case commission of
first offence of this kind there could not be extreme penalty of termination of
dealership. Further these guidelines categorically provide that before taking any such
action show-cause notice has to be served upon the delinquent dealer. He, Therefore,
submitted that on either counts termination of dealership would be illegal. In support
of his submissions, learned Counsel for the petitioners relied upon a recent judgment
of the Supreme Court in the case of Harbanslal Sahnia and Anr. v. Indian Oil
Corporation Ltd. and Ors., Civil Appeal Nos. 8620-8621 of 2002 decided on
20.12.2002 which was a case of termination of dealership by the Indian Oil
Corporation Ltd. itself. In addition he referred to the following judgments:
(1) Sahadat Hossain v. Sub-Divisional Controller of F & S., Katwa Burdwan
and Ors., MANU/WB/0008/1988 : AIR1988Cal44 .
(2) Durga Oil Mill and Anr. v. The State of Bihar and Ors.,
MANU/BH/0035/1977 : AIR1977Pat134 .
(3) Rajendralal Shadilal and Co. Pvt. Ltd. and Anr. v. The State of
Maharashtra and Anr., MANU/MH/0202/1980 : AIR1980Bom261 .
(4) Anand Jaiswal v. State of Madhya Pradesh and Ors., AIR 1987 M Ph 96.
7 . Mr. Kalra, learned Counsel appearing for the respondents on the other hand
referred to various clauses of Dealership Agreement to point out that such Dealership
Agreement was terminable by three months notice, in writing to the other, of its
intention to terminate this Agreement and, Therefore, when the respondent No. 2 had
right to terminate the Agreement, giving of show-cause notice was not mandatory.
His submission was that it was a contractual matter between the petitioner No. 2 and
the respondent No. 2 and terms and conditions of the contract were stipulated in
Agreement dated 8.2.1978. Parties were bound by these terms and conditions of the
contract and being a contractual matter this writ petition challenging the termination
was not maintainable. According to him even if it is presumed that termination was
illegal, remedy of the petitioner was to seek damages for wrongful termination of the
contract. In this behalf, he referred to Clauses 3, 13, 16 and 56(j) of the Terms and
Conditions of the Agreement. He further submitted that even if there was a dispute,
Clause 67 of the Agreement provided for settlement of such dispute by means of
arbitration and on this ground also this writ petition was not maintainable. He further
submitted that reliance given on the guidelines by the petitioner was misconceived as
these guidelines were not mandatory in nature. His submission was that in
exceptional cases it was still within the rights of the respondent No 2 to terminate the
Agreement and the instant case was of this nature wherein serious allegations were
leveled against the petitioner which form part of FIR as well. He argued that general
public interest warranted taking of immediate and urgent action in this matter, by
terminating the dealership without observing principles of natural justice which was
not a necessary requirement in any case. In support of this submission, he relied
upon the judgment in the case of Union of India and Anr. v. Tulsiram Patel, reported
i n AIR 1985 SC 1418 and Smt. Meneka Gandhi v. Union of India and Anr.,
MANU/SC/0133/1978 : [1978]2SCR621 . He further submitted that in contractual
matters where the Agreement did not have statutory flavour, writ petition could not
be filed and for this proposition he made reference to the judgment of Supreme Court
in the case of Kerala State Electricity Board and Anr. v. Kurien E. Kalathil and Ors.,

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 MANU/SC/0435/2000 : AIR2000SC2573 and Indian Oil Corporation Ltd. v. Amritsar
Gas Service and Ors., (1990) Suppl. 3 SCR 196. His further submission was that the
issue involved disputed questions of fact which could not be gone into writ petition
and the proper remedy for the petitioners was to invoke arbitration.
8. First and foremost question which needs to be determined is as to whether before
taking such action of termination of agency, respondent No. 2 was required to
observe principles of natural justice. The outcome of the writ petition as well as
answer to other submissions would depend on determination of this question. It
cannot be denied that the respondent No. 2 is "another authority" and is an
instrumentality and/or agency of the State within the meaning of Article 12 of the
Constitution of India and provisions of Chapter-111 of the Constitution are attracted.
It is trite of law that principles of natural justice are treated as part of Article 14 of
the Constitution. Therefore, if principles of natural justice were to be observed by the
respondent No. 2, violation thereof would mean infarction of Article 14 of the
Constitution and thus writ petition would be maintainable. It is because of this reason
that one has to decide the question of applicability of principles of natural justice in
the instant case.
9 . As noted above, IOC, whenever enters into dealership agreement, executes
memorandum of agreement which lays down standard terms and conditions These
conditions, inter alia, include provision for termination of the dealership, as well. It is
provided that the agreement can be terminated by giving required notice. It may
however, be mentioned that at the same time in order to ensure that such
agreements with the dealers are worked out in a systematic manner and the
respondent-IOC does not invoke the termination clause arbitrarily, Government of
India has issued Marketing Discipline Guidelines. These Guidelines are laid down in
order to ensure that retail outlets are carried on the principles of highest business
ethics and excellent customer service and customers receive product of the right
quality and quantity. The purpose is also to ensure that dealers follow the correct and
safe practices in handling and dispensing petroleum products, show courteous
behavior to customers and provision of uniform code of conduct and discipline is
enforced throughout the country dealership network of the industry. For ensuring
uniform code of conduct and discipline, the Guidelines also enumerate the nature of
irregularities which may be committed by such dealers and the action which is
required for such irregularities. Chapter 6 of these Guidelines filed "Prevention of
Irregularities at Retail Outlets" stipulates major as well as minor irregularities and
provides for the penalties for such major and minor irregularities. At the end of
Chapter 6, nine notes are given. Short-delivery of products is treated as major as
well as minor irregularity. When weights and measure seals are tampered with, short
delivery of products is treated as major irregularity and when weights and measure
seals are intact but deliveries are below tolerance limit, short delivery of product is
treated as minor irregularity. The penalty for short delivery of products as major
irregularity is provided in the following manner :
"Short Delivery of Products
When weights and measure seals are tampered with:
(i) Suspension of sales and supplies of all products for 30 days
along with a fine of Rs. 50,000/- in the first instance.
(ii) Fine of Rs. 1 lakh and suspension of sales and supplies of all

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 products for 45 days in the second instance.
(iii) Termination in the third instance."
Penalty for short delivery products as major irregularity is provided in the
following manner:
Short Delivery of Products
When Weights and Measure seals are intact but deliveries are below
tolerance limit:
(a) Sales and supplies should be stopped from the Dispensing unit
till recalibration is carried out by Weights and Measures department.
(b) (i) Suspension of sales and supplies of all products for 15 days
along with a fine of Rs. 20,000/- in the first instance.
(ii) Suspension of sales and supplies for 30 days along with a fine of
Rs. 50,000/- in the second instance.
(iii) Suspension of sales and supplies of all products for 45 days
along with a fine of Rs. 1 lakh in the third instance.
(iv) In extreme cases, where it is proved that the dealer has
tampered with the delivery system, termination will be considered in
the fourth instance."
10. For our purposes notes appended thereto being relevant are quoted below:
(i) The above are general guidelines and notwithstanding what has been
stated above, the Competent Authority of the concerned Oil Company can
take appropriate higher punitive action against the erring dealer including
termination in the first or any instance.
(ii) Every punitive action would be taken after show-cause notice of
minimum seven days.
(iii) The cycle of calculating second and third instances shall be five years
starting from the date of first irregularity.
(iv) In case, two or more irregularities are detected at the same time RO,
action will be taken in line with what is listed in the MDG under the relevant
category for each irregularity.
(v) All irregularities established under "Major" and "Minor" categories will be
treated separately for the purpose of imposing penalties.
(vi) Field staff should ensure that samples for testing are sent to the
Laboratory within 10 days of drawal of the same. Lab test reports should
thereafter be made available within ten days.
(vii) In case of irregularities not specifically mentioned /covered above, the
competent/appropriate authority of the concerned Oil Company shall impose
proper penalty and /or issue warning letter after inquiry and in accordance

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 with the principles of natural justice.
(viii) Under existing laws, Control Orders, etc., various authorities of Central
Government/State Government--In addition to Oil Company Officers --are
empowered to carry out checks of the dealership for determining and
securing compliance with such laws/Control Order. If any "malpractice or
irregularity" is established by such authorities after checking the same would
also be taken as a "malpractice or irregularity" under these guidelines and
prescribed punitive action would be taken by the Oil Company, on receipt of
advice from such authority.
(ix) Wherever fine with suspension has been provided, fine must be paid
within suspension period, failing which suspension would be extended by the
equivalent period. If fine is not paid even within the extended period, the
dealership would be terminated.
11. As per Note No. (ii) before taking punitive action show-cause notice of minimum
seven days would be served. When the respondents have themselves provided for
detailed procedure to take action in case a dealer is found to have committed some
irregularity as per which the show-cause notice has to be served, the respondents
cannot be permitted to say that such procedure is not to be followed. Mr. Kalra,
learned Counsel for the petitioner relied upon Note No. (i) to say that these
Guidelines were not of general nature and the respondent No. 2 was authorised to
take appropriate higher punitive action against the erring dealer including termination
in the first or any instance. That may be so. It cannot be denied that the kinds of
penalties which are provided are to be generally followed and in exceptional cases, if
the respondent No. 2 is of the opinion that higher penalty than the normal penalty
prescribed in the Guidelines is to be given, the respondent No. 2 is not powerless to
inflict such penalty. However, at this stage we are dealing with the question as to
whether before imposing the penalty principles of natural justice are required to be
observed. As pointed out above, respondents' own Guidelines prescribed this
procedure. It is trite of law that any action, even administrative, which visits person
with penal or civil consequences, before taking such action principles of natural
justice are generally to be followed unless the Legislature has by incorporating a
statutory provision specifically excluded the observance thereof. In the instance case,
there is no such exclusion. On the contrary the respondents have themselves
provided for the mechanism for taking such action and have rather incorporated the
provision for issuing of show-cause notice. In fact, even as per the argument of Mr.
Kalra, the respondents would be required to serve such a show-cause notice. The
penalties which are to be given in case of such irregularities are already mentioned
above. Mr. Kalra submits that the respondent-IOC has right to take appropriate
highest punitive action even in the first or any instance. That means in a given case
the respondent No. 2 can depart from the normal penalties. If respondents want to
take such action, they will have to justify the same on the facts and circumstances of
a particular case and this itself necessitated observance of principles of natural
justice by putting the dealer to notice that going by the serious irregularity in a given
case, the respondent propose to terminate the dealership and Therefore such a dealer
will have to be given an opportunity to show cause against such a proposed action.
When normally from the Guidelines a dealer is put to notice for any irregularity, like
in the instant case, the first instance which would visit is the penalty of suspension
for a few days and some fine in monetary terms.
12. A Full Bench of this Court in the case of J.T. (India) Exports v. Union of India

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 and Anr., reported in 2001 (78) ECC 677, recapitulated the legal position on this
aspect after scanning important case law, Indian as well as English. Arijit Pasayat, CJ
(as he then was) speaking for the Court formulated the legal position in the following
manner:
"Para 4 : The expression 'natural justice and legal justice' does not present a
water-tight classification. It is the substance of justice which is to be secured
by both, and whenever legal justice fails to achieve this solemn purpose,
natural justice is called in aid of legal justice. Natural justice relieves legal
justice from unnecessary technicality, grammatical pedantry or logical
prevarication. It supplies the omissions of a formulated law.
Para 5 : The adherence to principle of natural justice as recognised by all
civilised States is of supreme importance when a quasi-juridical body
embarks on determining disputes between the parties. These principles are
well-settled. The first and foremost principle is what is commonly known as
audi alteram partem rule. It says that none should be condemned unheard.
Notice is the first limb of this principle. It must be precise and unambiguous.
It should appraise the party determinatively the case he has to meet. Time
given for the purpose should be adequate so as to enable him to make his
representation. In the absence of a notice of the kind and such reasonable
opportunity, the order passed against the person in absentia becomes wholly
vitiated. Thus it is but essential that a party should be put on notice of the
case before any adverse order is passed against him. This is one of the most
important principles of natural justice. It is after all an approved rule of fair
play.
Para 6: Principles of natural justice are those rules which have been laid
down by the Courts as being the minimum protection of the rights of the
individual against the arbitrary procedure that may be adopted by a judicial,
quasi-judicial authority while making an order affecting those rights. These
rules are intended to prevent such authority from doing injustice."
1 3 . The Court, thereafter, concluded from some leading judgments of Court in
England including Board of Education v. Rice, 1911 AC 179 and Earl of Salbourne, LO
in Spackman v. Plumstead District Board of Works, 1985 (10) AC 229, and expressed
in the following manner as to how concept of principles of natural justice had shaped
over a period of time:
"Para 11: Concept of natural justice has undergone a great deal of change in
recent years. Rules of natural justice are not rules embodied always
expressly in a statute or in rules framed there under. They may be implied
from the nature of the duty to be performed under a statute. What particular
rule of natural justice should be implied and what its context should be in a
given case must depend to a great extent on the fact and circumstances of
that case, the framework of the statute under which the enquiry is held. The
old distinction between a judicial act and an administrative act has withered
away. Even an administrative order which involves civil consequences must
be consistent with the rules of natural justice. Expression 'civil consequences'
encompasses in fraction of not merely property or personal rights but of civil
liberties, material deprivations, and non-pecuniary damages. It its wide
umbrella comes everything that affects a citizen in his civil life.

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 Para 12: Natural justice has been variously defined by different Judges. A
few instances will suffice. In Drew v. Drew and Lebura, 1855 (2) Macg. 1.8,
Lord Cranworth defined it as ' universal justice'. In James Durber Smith v.
Her Majesty the Queen, 1877 (3) App. Cas 614 Sir Robort P. Collier, speaking
for the judicial committee of Privy Council, used the phrase "the
requirements of substantial justice while in Arthur John Specman v.
Plumstead District Board of Works, 9188 (10) App. Cas 229, Earl of
Salbourne, S.C. Preferred the phrase "The substantial requirement of justice".
In Vionet v. Barrett, 1885 (55) L JRD 39, Lord Fasher, M.R. defined natural
justice as 'the natural sense of what is right and wrong'. While, however,
deciding Hookings v. Smethwick Local Board of Health, 1890 (24) QBD 712,
Lord Fasher, M.R. instead of using the definition given earlier by him in
Vionet v. Barrett (supra), chose to define 'natural justice as fundamental
justice'. In Ridge v. Baldwin, 1963 (1) WB 569, Harnian L J. in the Court of
appeal described natural justice as 'fairplay in action'. This was noted in
Maneka Gandhi v. Union of India, MANU/SC/0133/1978 : [1978]2SCR621 .
In re R.N. (An Infaot) 1967 (2) B 617, Lord Parker, CJ, preferred to describe
natural justice as 'a duty to act fairly'. In Fairmount Investments Ltd. v.
Secretary to State for Environment, 1976 WLR 1255, Lord Russell of Willow
an somewhat picturesquely described natural justice as 'a fair crack of the
whip' while Geoffrey Lane, L J in Regina v. Secretary of State of Home Affairs
Exparte Hosenball, 1977 (1) WLR 766, preferred the homely phrase 'common
fairness'.
Para 14: Even, if grant of an opportunity is not specifically provided for it
has to be read into the unoccupied interstices and unless specifically
excluded principles of natural justice have to be applied. Even if a statute is
silent and there are no positive words in the Act or Rules spelling out the
need to hear the party whose rights and interests are likely to be affected,
the requirement to follow the fair procedure before taking a decision must be
read into the statute, unless the statute provides otherwise. Reference is
accordingly disposed of.
14. Once it is held that the principles of natural justice are to be normally followed
before taking such an action next question which falls for determination is as to
whether observance of principles of natural justice can be dispensed with in general
public interest, when the offence alleged is of very serious nature. Learned Counsel
for the respondents, however, argued that there may be cases of grave nature where
immediate action is warranted and observance of principles of natural justice may
defeat the very purpose of taking action. In support of this proposition, as pointed
above, Mr. Kalrahad referred to the judgment of Supreme Court in the case of Maneka
Gandhi (supra), and Tulsi Ram Patel (supra).
15. What would be the position when very emergent and immediate action is to be
taken keeping in view the serious and/or sensitive nature of allegations against a
particular contractor/supplier and observance of principles of natural justice and time
consumed therein may defeat the very purpose for which emergent action is
required?
16. There could be two answers to this question which are as follows:
(a) In a given case the Government can justify that principles of natural
justice are not required to be observed at all. In the judgment dated 7th

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 January, 2003 in CWP No. 5375/2002, the Court held that based on dictum
laid down in the cases of R.S. Dass v. Union of India and Ors., reported in
MANU/SC/0482/1986 : [1987]1SCR527 ; Shiv Sagar Tewari v. Union of
India, MANU/SC/0739/1997 : AIR1997SC2725 , the position wr ich emerges
is that the Court would not compel observance of rules with natural justice in
cases:
(i) where giving of notice would obstruct taking of prompt action
and the matter is urgent and requires prompt action. Inaction or
delay would paralyse the administrative process/machinery.
(ii) Where on indisputable or admitted facts, only one conclusion
possible and it would be futile to issue a writ or compel observance
or principles of natural justice.
(iii) Where observance of principles of natural justice is excluded by
express provisions of statute or by implication,
Thus if the Government is able to bring its case within the sweep of any of
the aforesaid situation, it can justify giving go-bye to the observance of rules
of natural justice. Further in a given case the Court can still deny relief in
exercise of writ jurisdiction even though the impugned order was not
sustainable if the Government is able to justify that giving relief would do
greater harm to the society and would be prejudicial to public interest.
(b) If the action to be taken is of such an emergent nature that pre-
decisional hearing would not be possible, purpose can be achieved by giving
post-decisional hearing as held in the case of Liberty Oil Mills and Others v.
Union of India and Ors., MANU/SC/0029/1984 : [1984]3SCR676 , wherein
the Court observed:
"... Does it mean that the principle of natural justice of procedural
fairness is to be altogether excluded when action is taken under
Clause 8-B? We do not think so. We do not think that it is
permissible to interpret any statutory instrument so as to exclude
natural justice, unless the language of the instrument leaves no
option to the Court. Procedural fairness embodying natural justice is
to be implied whenever action is taken affecting the rights of parties.
It may be that the opportunity to be averted or the act to be
prevented is imminent or where the action to be taken can brook no
delay. If an area is devastated by the flood, one cannot wait to issue
show- cause notices for requisitioning vehicles to evacuate
population. If there is an out-break of epidemic, we presume one
does not have to issue show-cause notices to requisition beds in
hospitals, public or private. In such situations, it may be enough to
issue post-decisional notices providing for an opportunity."
It however, gave example of such emergent cases where pre-decisional
hearing may not be necessary and post-decisional hearing would serve the
purpose by making these remarks:
".... It may be that the opportunity to be heard may not be pre-
decisional; it may necessarily have to be post-decisional where the
danger to be averted or the act to be prevented is imminent or where

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 the action to be taken can brook no delay. If an area is devastated
by flood, one cannot wait to issue show-cause notices for
requisitioning vehicles to evacuate population. If there is no
outbreak of epidemic, we presume one does not have to issue show-
cause notices to requisition beds in hospitals, public or private. In
such situation, it may be enough to issue post-decisional notices
providing for an opportunity. It may not even be necessary in some
situations to issue such notices, but it would be sufficient but
obligatory to consider any representation that may be made by the
aggrieved person and that would satisfy the requirements of
procedural fairness and natural justice....."
1 7 . The Court further added that pre-decisional natural justice is not usually
contemplated when the decisions taken are of the interim nature pending
investigation or inquiry. Such an order may be made ex parts which may provide an
opportunity to the aggrieved party to be heard at a later stage.
1 8 . Thus the Supreme Court held in the aforesaid cases that there may be
circumstances where immediate action is required and in such cases pre-decisional
natural justice may not be contemplated and purpose can be served by giving post-
decisional hearing. However going by the facts and circumstances it cannot be said
that the alleged offence was so grave that it was necessary for the respondent No. 2
to dispense with the provisions of requirement of observance of show-cause notice
before taking drastic action of terminating the dealership agency. Even if the
respondent No. 2, in such circumstances, it was of the opinion that the kind of
irregularity committed by the petitioner is serious, was not remediless and could
have resorted to suspension of the dealership pending inquiry by serving show-cause
notice. However, the respondent No. 2, going by the allegations contained in First
Information Report, took the impugned action thereby presuming that whatever is
stated in the First Information Report or whatever is the Report of inspection is
gospel truth and has to be believed without giving any chance to the petitioner to
rebut the same. It cannot be treated as fair play or in consonance with the sense of
justice. After all, even as per the procedure prescribed by the respondent No. 2
show-cause notice only of seven days was required to be given. Thus even if the
respondent No. 2 had followed the procedure prescribed it would not have taken
much time before concluding the hearing and taking action. I may point out at this
stage that I am not going into the issue as to whether allegations, contained in the
inspection Report and First Information Report are correct inasmuch as learned
Counsel for the petitioner has also tried to argue that the allegations made against
the petitioner are not correct. It would be a matter for the respondent No. 2 to decide
after giving proper opportunity to the petitioner. Any observation made by this Court
at this stage may have an adverse effect on the petitioner and/or the respondent and
that is why, I am refraining from making any such observations. I am only concerned
with the manner in which action is taken by the respondent No. 2. Once it is found
that principles of natural justice were required to be complied with for taking such
action and admittedly that is not done the impugned notice/ decision dated 13th
June, 2001 terminating the dealership of the petitioner cannot be sustained and is
hereby set aside.
19. The view which I have taken as aforesaid, other judgments cited by the learned
Counsel for the respondent No. 2 shall be of no avail. On the other hand judgment of
Supreme Court in the case of Harbans Lal (supra), which was a case of termination of
dealership by IOC itself, would squarely apply to the facts and circumstances of this

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 case. In fact this judgment answers both the contentions raised by learned Counsel
for the respondent No. 2 to the maintainability of the writ petition. In this case, the
Supreme Court negatived the contention of IOC to the effect that writ petition was
not maintainable as relationship between the parties was contractual and further the
Dealership Agreement contained an arbitration clause. In that case for certain alleged
irregularities committed by the dealer show-cause notice was given which was
however not persuaded. But thereafter dealership was terminated. The Supreme
Court set aside the termination order. One may also make mention of the judgments
of the Supreme Court in the cases of Kumari Shrilekha Vidyarthiv. State of J&K,
reported in AIR 1991 AC 537 and Mahavir Auto Stores and Ors. v. Indian Oil
Corporation and Ors., MANU/SC/0191/1990 : [1990]1SCR818 .
20. The result of the aforesaid discussion is that this writ petition is allowed. Rule is
made absolute. Termination order dated 13th June, 2001 is hereby quashed.
21. It may be mentioned at this stage that before this writ petition could be filed the
respondents had taken over the possession of the petrol pump. It is being run by the
respondent No. 2 at present. Since the Termination Order dated 13th June, 2001 is
quashed, the respondent No. 2 shall restore the possession of this petrol pump to the
petitioner. The respondent No. 2 shall be at liberty to take appropriate action after
complying with principles of natural justice and in accordance with Marketing
Discipline Guidelines.
In the facts and circumstances of this case there shall be no order as to costs.

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03-12-2017 (Page 11 of 11) www.manupatra.com Mr. Ravi Bhansali